Investor relations week: CEO salaries fall, SEC targets securities lending, sovereign wealth funds continue to grow

– The Financial Time (paywall) reported that CEO compensation in the FTSE 100 has fallen nearly a tenth this year as companies cut executive rewards under pressure from shareholders during the pandemic. An analysis of PwC’s annual reports also showed that many companies are now adding ESG criteria to their compensation policies. Median total compensation for FTSE 100 CEOs fell 9% in fiscal 2021 to £ 2.9million ($ 3.9million). Almost a third of CEOs did not receive any bonuses, either because they did not meet targets or because the bonus was canceled or removed – that’s twice as many CEOs as did not received a bonus in 2020, according to the newspaper.

Global custodian reported that the SEC was seeking to “follow its European counterparts” in shedding light on securities lending transactions in an effort to bring transparency to what it called an opaque area of ​​the market. The proposed Exchange Act Rule 10c-1 would require securities lenders to provide the material terms of transactions to a registered national securities association, such as FINRA. The national securities association would then make the material conditions of the securities lending transaction available to the public. “In today’s rapidly changing financial markets, it is important that market participants have access to fair, accurate and timely information,” SEC Chairman Gary Gensler said as quoted by Global Custodian. “This proposal would bring securities lending out of obscurity. We have posted this proposal for comment, and I look forward to hearing from the public.

– Pension funds continue to control a dominant share of global assets, but sovereign wealth funds (SWFs) are growing faster and innovating, according to a report by Willis Towers Watson Thinking Ahead Institute covered by Institutional investor. At the end of 2020, the assets of the first 100 beneficiaries reached 23.5 billion dollars, an increase of 16.4% compared to 2019. Of the 20 largest global funds, 10 are sovereign funds (representing 52.5% of First 20), nine are pension funds. fund (45 percent) and one is an outsourced investment manager (2.9 percent). “Sovereign wealth funds started later but grew faster,” Roger Urwin, global head of investment content at Willis Towers Watson, told the publication. ” Pension funds [enjoyed] faster growth [but are now] pay a lot more. Sovereign wealth funds continue to accumulate assets, which means that nation states that manage [them] keep putting money in [them]. ‘

– According to Media MarketsNYSE President Stacey Cunningham expects the exchange to see more direct listings as companies consider their increased choices of how to go public. Speaking at the conference on the quality of financial markets hosted by the Center for Financial Markets & Policy at the McDonough School of Business at Georgetown University, Cunningham noted that “no one expected 2020 to break. capital raising records “. 2021 broke those records during the year, so this is a change in trend with companies going public rather than private. Describing direct ads as innovative, she added, “I would keep an eye on the direct ads space because we had one in 2018, one in 2019 and now we have seven or eight – so it’s picking up.”

– White goods company AO World saw its shares drop 24% in just one hour, reported CityAM. The online electricity retailer reported an operating loss of £ 11million in the six months to September 30, 2021, as a driver shortage and global supply chain issues slowed growth in the UK. Due to the “substantial amount of near-term uncertainty,” AO World has lowered its revenue projections for the full year to minus 5% year-over-year. The disappointing results come a year after the UK-based company reported operating profit of £ 16million for the same period.

– Fidelity, UBS and State Street Global Advisors confirmed to the FT that, like their rivals BlackRock and Invesco, they are exploring the potential to offer exposure to cryptocurrencies, such as Bitcoin. The assets of European exchange traded products and mutual funds exposed to cryptocurrencies have exceeded 10.5 billion euros ($ 11.8 billion), according to Morningstar data, showing the potential appeal of these products for asset managers, according to the newspaper.

– Investors have injected record amounts into Southeast Asian fintech companies this year, the FT, as stranded consumers have turned to mobile payment and banking apps. According to data from analysis group Refinitiv, there were 80 fintech deals worth $ 3 billion in 2021, more than what was raised in 2020 and 2019 combined.

– The International Organization of Securities Commissions (IOSCO) said that monitoring of ESG ratings needs to improve, Reuters reported. IOSCO wants the ESG ratings assigned to companies to be more transparent in their data and the methodology used to create a rating. IOSCO cited research indicating that annual expenditure on ESG data is increasing by 20% and could reach $ 1 billion this year, as asset managers try to ensure they invest in a sustainable manner. IOSCO’s calls for more transparency are part of a larger trend: the UK government said ahead of COP26 that UK companies are expected to reveal climate data in 2022.

– In other ESG news, Reuters reported that companies in the most polluting sectors that have invested in climate action often find themselves valued below their peers who have been slower to do so, highlighting the difficulty of getting shareholders to support sustainability. Investors have invested more than $ 30 billion in ESG strategies, according to data from the Global Sustainable Investment Alliance. But demand for sustainable investments has yet to remove the pressure to put profits first, and pro-climate analysts fear the results of the UN climate talks earlier this month will have helped too little.

Analyzes of companies around the world by management consulting firm Kearney in November, along with data from Credit Suisse Group released in April, show that companies that cut emissions in sectors where it was costly and where government regulations were limited were on average less valued than more peer issuers. It was found that investors only rewarded companies with the highest emissions for taking action on climate change when the cost of that action was relatively low and government support and regulations were relatively strong.

Reuters reported that a California judge is unlikely to block a law requiring public companies headquartered in the state to have a minimum number of women on their boards before a December deadline. U.S. District Judge John Mendez said he is still considering the argument by OSI Systems shareholder Creighton Meland that the 2018 law is unconstitutional because it puts pressure on shareholders to vote for women directors. But the judge said in a hearing that Meland hasn’t shown the trial is likely to succeed, meaning he likely won’t stop the California Secretary of State from enforcing the law while the case is pending.

The lawsuit is one of many challenges to the law, which required companies to have at least one woman on their boards by the end of 2019. By the end of this year, five-member boards must include at least two women and the more important councils must have Three.

Anastasia Boden, who represents Meland, said that while the law may have increased representation, it has led to dating of board candidates.

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